Questions from Taxation

Q: This year, Neil Inc. exchanged a business asset for an

This year, Neil Inc. exchanged a business asset for an investment asset. Both assets had a $932,000 appraised FMV. Neil’s book basis in the business asset was $604,600, and its tax basis was $573,000....

Q: CC Company exchanged a depreciable asset with a $17,000

CC Company exchanged a depreciable asset with a $17,000 initial cost and a $10,000 adjusted basis for a new asset priced at $16,000. a. Assuming that the assets do not qualify as like-kind property, c...

Q: James Jones is the owner of a small retail business operated as

James Jones is the owner of a small retail business operated as a sole proprietorship. During 2017, his business recorded the following items of income and expense. Revenue from inventory sales ……………...

Q: JC recently graduated from veterinary school and opened her own professional practice

JC recently graduated from veterinary school and opened her own professional practice. This year, her net profit was $32,000. Compute JC’s after-tax income from her practice assuming: a. Her self-empl...

Q: Jane is a self-employed attorney. This year, her

Jane is a self-employed attorney. This year, her net profit exceeded $350,000, which put her in the 37 percent tax bracket. Early in the year, Jane hired Ben as a paralegal and paid him a $33,000 sala...

Q: AB Corporation and YZ Corporation formed a partnership to construct a shopping

AB Corporation and YZ Corporation formed a partnership to construct a shopping mall. AB contributed $500,000 cash, and YZ contributed land ($500,000 FMV and $430,000 basis) in exchange for a 50 percen...

Q: This year, FGH Partnership generated $600,000 ordinary business

This year, FGH Partnership generated $600,000 ordinary business income. FGH has two equal partners: Triad LLC and Beta, an S corporation. Triad LLC has three members: Mr. T, who owns a 40 percent inte...

Q: Rochelle is a partner in Megawatt Partnership. For 2018, her

Rochelle is a partner in Megawatt Partnership. For 2018, her schedule K-1 from the partnership reported the following share of partnership items. Ordinary income ………………………………$25,000 Section 1231 loss...

Q: KLMN Partnership’s financial records show the following. Gross receipts

KLMN Partnership’s financial records show the following. Gross receipts from sales ………………………………$670,000 Cost of goods sold ………………………………………..(460,000) Operating expenses ………………………………………..(96,800) Busi...

Q: Firm X has the opportunity to invest $200,000 in

Firm X has the opportunity to invest $200,000 in a new venture. The projected cash flows from the venture are as follows: Firm X uses an 8 percent discount rate to compute NPV, and its marginal tax...